Gulf shareholders gain $400bn in 2007

By

Nadim Kawach

PublishedWednesday, January 02, 2008

(IMAD ALAEDDIN)

Arab stock markets rebounded into massive profits of more than $400 billion (Dh1.57 trillion) in 2007 after losing at least $390bn in 2006 mainly because of widespread speculation and collapse of some shares, according to official figures.

The UAE and neighbouring Gulf Arab states were the star performers this year, accounting for the bulk of the increase in the share investors’ wealth, showed the figures by the Abu Dhabi-based Arab Monetary Fund (AMF), which tracks the movement of 15 stock exchanges in the Arab world.

By the end of 2006, the market capitalisation of the region’s bourses dived by nearly $292bn to around $888.1bn from $1.28trn at the end of 2005 but it recovered by $426.8bn in 2007.

Most of the increase in 2007 was in the bourses of the six Gulf Co-operation Council (GCC) states, which also accounted for the bulk of the turnover, with Saudi Arabia’s market exchanging over $1trn worth of shares.

“The investment atmosphere was more favourable this year and there were no crashes in key markets,” said Mohammed Yassin, manager of the Abu Dhabi-based Emirates Securities. “This year was one of the best years for many Arab bourses.”

The AMF said the increase in capitalisation in the region was a result of a surge in the shares of companies rather than entry of new companies or capital hikes. Its composite index, which tracks the indices of those markets, rose from 227.56 points at the end of 2006 to 267.95 in 2007.

A breakdown showed Saudi Arabia was the main gainer in 2007, with its market capitalisation surging by around $157bn to nearly $676.1bn at the end of 2007 from $519.1bn in 2006. Kuwait, the second busiest bourse, gained around $86bn while the UAE market was wealthier by nearly $65bn.

Most other markets performed better except Morocco’s Casablanca Stock Exchange and the Palestinian Securities Exchange, which declined. The capitalisation of the Arab markets surged this year despite a decline in the number of listed companies to 1,540 in from 1,623 in 2006. Most of the decline was in Egypt, where the number of trading firms plummeted to 446 from 603 in the same period.

By the end of 2007, the UAE’s bourses of Abu Dhabi and Dubai had 122 listed companies while there were 110 in Saudi Arabia, 196 in Kuwait, 40 in Qatar, 50 in Bahrain and 124 in Oman. Outside the GCC, there were 248 companies in Jordan, 47 in Lebanon, 72 in Morocco, 35 in the Palestinian exchange, 50 in Tunisia, 52 in Sudan and two in Algeria.